U.S. forces fought with militants loyal to Shiite cleric Muqtada al-Sadr (search) near a mosque in Kufa Wednesday, leaving at least six Iraqis dead and 40 others wounded, according to hospital officials.

The violence continued near sunset Wednesday, as several strong explosions and bursts of gunfire resounded through Kufa. Al-Mahdi militiamen crouched behind walls of residential buildings, waiting to see if the Americans would advance into their area.

At a Kufa hospital, officials said about 30 people were admitted for various wounds. One of them, 16-year old Malik Ali, lay in a hospital bed, his face and clothes covered with blood. Neighbors said he was shot outside his home.

Also Wednesday, a third fatal car bomb in as many days shook Baghdad. A vehicle exploded in a Sunni Muslim district, killing at least five people and wounding about 33 others, including children, police said.

West of the capital, insurgents fired mortars at a police station near the guerrilla stronghold of Fallujah, killing an Iraqi civilian and wounding three people, including a U.S. Marine. The mortar rounds hit the station in the Fallujah suburb of Kharma.

Earlier Wednesday in Kufa (search) explosions rocked the industrial sections where Shiite leaders have struggled to save a shaky cease-fire. Many of the injured suffered shrapnel wounds from a mortar round that missed a U.S. convoy, witnesses said.

Gunfire reverberated through the largely deserted streets as fighters loyal to al-Sadr took positions near the mosque, where gunbattles have raged in past days. Tanks and Humvees rolled into the center of the city at midmorning, prompting terrified civilians to scramble for cover.

Al-Sadr's forces and U.S. troops also exchanged gunfire in the Shiite district of Baghdad known as Sadr City, killing one fighter and injuring three, officials in al-Sadr's office said.

Fighters threatened to conduct suicide operations if talks meant to calm the situation failed.

"We will use explosive belts to attack the U.S. tanks," said one fighter, Ali Hussein.

Clashes have plagued Kufa nearly every day since Shiite leaders announced an agreement by al-Sadr to end a two-month old standoff with coalition forces here and in the twin city of Najaf.

U.S. officials say insurgents will step up attacks in the days leading to the June 30 transfer of sovereignty from the U.S.-led occupation authority to the interim Iraqi government.

"There may even be an up tick in violence because there are people who don't want to see Iraq move toward democracy," National Security Adviser Condoleezza Rice (search) told Fox News Wednesday.

"The [Iraqi] prime minister said yesterday to the coalition 'Thank you for our liberation.' They are very grateful for the sacrifice of American and coalition lives on their behalf," Rice said.

One proposal under discussion to end the violence calls for al-Sadr's militia to withdraw from Najaf over a 72-hour period. In return, U.S. troops would stay away from Shiite holy sites in Najaf and Kufa — where coalition and militia forces have battled since al-Sadr launched an anti-occupation uprising in early April.

Ahmad al-Shibani (search), an official from al-Sadr's office in Najaf, said al-Sadr's movement would likely have objections to the deal because it calls for them to surrender their weapons and provides for joint patrols including U.S. soldiers and Iraqi police.

On Wednesday, Shiite negotiators blamed coalition forces for a "clear violation" of the cease-fire agreement.

"What's going on now is targeting the people of holy Najaf who have gone out to the streets, optimistic," the statement said. "We can only hold you responsible for these actions."

The Shiite team said that since Tuesday evening, American troops attacked the Kufa mosques three times, twice targeting the same mosque. An industrial neighborhood was also attacked.

There was no comment from U.S. officials, who have repeatedly said they were not a party to any agreement with al-Sadr but had agreed to suspend offensive operations.

Wednesday's car bomb exploded in the Baghdad's northern Azimiyah district. Witnesses said a convoy of sport utility vehicles, favored by Western contractors, had passed by moments before the blast.

On Tuesday, a car bomb killed three people and injured about 20 near the headquarters of the pro-American Patriotic Union of Kurdistan (search). Security was stepped up Wednesday at the PUK's headquarters city of Sulaimaniyah, with police setting up more checkpoints and increasing the number of patrols there.

The explosion at the PUK headquarters was part of a series of blasts that shook the center of the Iraqi capital Tuesday as a new, post-occupation government for Iraq was announced. Ghazi al-Yawer (search), a U.S.-educated tribal sheik and critic of the U.S.-led occupation, was named as president.

Outside the capital on Tuesday, a roadside bomb exploded near the U.S. military base, killing 11 Iraqis and wounding 23, near Beiji, 150 miles north of Baghdad. Two 1st Infantry Division soldiers were also wounded, the military said.

The Associated Press contributed to this report.